Telecommunications companies would need to assess the financial circumstances of their customers before locking them into multi-thousand dollar contracts under a plan put forward by the industry watchdog in response to thousands of complaints.

Telecommunications Industry Ombudsman Judi Jones will release a report on Wednesday suggesting hard-selling phone companies should be subjected to similar rules to lenders.

Telecommunications Industry Ombudsman Judi Jones.Credit:Paul Jeffers

“Smartphones and internet data services are an important part of daily life for most Australians,” Ms Jones said.

“The telecommunications industry should ensure it offers credit responsibly because financial over-commitment is a problem that can cause considerable consumer detriment.

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“If a consumer went to a bank and asked for a $3000 loan, the bank checks the consumer’s capacity to repay that loan.”

Ms Jones’ office received more than 7400 complaints about managing telco debt in the six months to June 31, 2018 - making up 10 per cent of overall complaints received in that period - and rising two per cent compared to the same period the year before.

Sometimes you have particularly vulnerable or disadvantaged consumers [who fall victim to these sales tactics]

Ombudsman Judi Jones

Ms Jones has made four recommendations to the industry, designed to protect consumers from irresponsible sales tactics driving them into debt.

Her office will monitor their data to see if complaints about this issue reduce.

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“There’s been a slight increase in complaints [about telco debt] but the real reason we’re focused on it is because it impacts the consumers in a significant way,” Ms Jones said.

“Yes, consumers should be mindful of what they can afford, but sometimes you have particularly vulnerable or disadvantaged consumers [who fall victim to these sales tactics].”

One case study detailed in the report recounts the experience of a “vulnerable” woman, unable to speak English and on a disability pension. She was pressured into buying two post-paid phone plans with handsets.

Her account fell into arrears almost immediately after the first bill was issued, culminating in a $4500 final invoice and prompting the telecommunications company to start debt collection action.

Financial counsellors raised the alarm with the TIO about the plight of the woman, who was living in a hostel, when she says she was pressured into purchasing the phone plans.

She had already been default listed by the telco after owing $3500 on another account.

Australian Communications Consumer Action Network chief executive Teresa Corbin said the industry needed a regulatory body, comparing the Ombudsman’s findings to those uncovered during the banking royal commission.

“Selling practices are very poor,” Ms Corbin said.

“They’re driven by the need to meet sales targets not looking at consumers’ actual needs. One of the findings in the banking royal commission was the poor sales tactics - this is ultimately the same.”

The chief executive of Communications Alliance, the peak body for the telcos, John Stanton, said the industry was also pushing for stricter rules around credit assessment and selling practices.

"Active engagement by the Ombudsman and responsive action by suppliers are hallmarks of an effective co-regulatory system, which is bearing positive results in the telecommunications sector," Mr Stanton said.